Major credit rating agencies—Moody's, Standard & Poor's, Fitch—have had a helluva time of late, facing criticism from all angles for having failed to preempt the financial meltdown. Enter KPMG and PwC, who see an opening and are looking to pounce. Well, not a pounce, per se, more like a minute-long consideration of a leap, followed by a turn of the shoulder in the other direction. Certainly, the companies already have the technical and industry know-how to get the job done, it's just a matter of processing the information in a new way. But John Griffith Jones, UK chairman of KPMG, has said the firm is "passively considering it," not actively debating it.
A major reason for the hold-up for these and other accounting firms to break into the credit ratings game is concern over conflicts of interest, since they are also paid by the clients they audit. SOX compliance has made sure of that. But the value that KPMG, PwC and other auditors would be able to add to credit ratings is in providing subjective feedback on a company's position, rather than a list of stats and figures. As Griffith Jones puts it, "We are aware that people think we have conflicts of interest already. It probably makes it impractical. But if the world wanted another strong ratings player, there you are. Maybe the debate could be started off."
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